Zambia Copper Output to Rise 4% to Record, Lobby Group Says

(Bloomberg) -- Zambia's copper output will climb by about 4 percent to a record this year as operators near a resolution with government over power prices, according to the Chamber of Mines in Africa's second-biggest producer of the metal.

Production will increase to about 800,000 metric tons, said Nathan Chishimba, president of the lobby group. That would be higher than the 770,600 tons mined last year, and exceed a previous record of about 790,000 tons in 2013. The forecast is less optimistic than a projection by Christopher Yaluma, the mining minister, who sees output jumping to 850,000 tons.

Negotiations over a proposed power-tariff increase for the industry that accounts for more than half of Zambia's electricity consumption are “progressing well,” Chishimba said Tuesday in an interview in Kitwe, Copperbelt province. Most Zambia mines rejected an increase the government imposed in 2014, and again at the start of 2016, and talks have been ongoing.

“There could be one or two sticking points but I'm not sure if those will be show-stoppers,” Chishimba said. “I can confidently say that we hope to see resolution in the next few weeks.”

The lobby group has said in the past tariffs should be set according to the cost of producing power. Zambia's energy regulator in April appointed U.K.-based Economic Consulting Associates to study this, with the report due 12 months from then.

The government wants to recoup costs, while ensuring copper producers are profitable, Yaluma said earlier Tuesday. “We are not trying to choke anybody's throat,” he said.

Mining companies including Glencore Plc, Vedanta Resources Plc and Barrick Gold Corp. have operations in Zambia.

Zambia's copper industry is rebounding after prices for the metal used in wiring and plumbing fell 25 percent in 2015, the same year the country suffered its worst power crisis on record, leading to mine closures and thousands of job losses. Prices have risen about 1.5 percent this year to $5,616 per metric ton.

--With assistance from Matthew Hill

To contact the reporter on this story: Taonga Clifford Mitimingi in Johannesburg at tmitimingi@bloomberg.net.

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Rene Vollgraaff, Jacqueline Mackenzie